The Bureau of Economic Analysis reported today that Louisiana had growth in personal income of 4.83%, comparing 2011 to 2010, which ranks 34th among all states. The highest growth was North Dakota at 8.13% and the lowest growth was Maine at 3.35%. The reason we examine personal income is because it is a driver of growth for the economy and influences commercial real estate demand. Personal income growth drives commercial real estate demand because it increases consumer discretionary spending which causes retail development which leads to housing development which causes office and industrial development. New Orleans East is a good example of low personal income growth preventing commercial development. It never developed commercially because there were never enough rooftops and discretionary spending; in fact, Lake Forest Shopping Center was losing tenants long before Hurricane Katrina.
In order to get commercial real estate development in areas where there is low personal income growth, you need more population or rooftops. For example both Walgeens and CVS require 20,000 people in their trade area. It also helps to have a City Council Representative that is pro-business.
Personal income is the sum of net earnings by place of residence, property income, and personal current transfer receipts. Property income is rental income of persons, personal dividend income, and personal interest income. Net earnings is earnings by place of work (the sum of wage and salary disbursements, supplements to wages and salaries, and proprietors’ income) less contributions for government social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for price changes).
SA1-3 Personal income summary-sorted by 2010-2011 % Change
|Personal income (percent change from preceding period)|
|Bureau of Economic Analysis|
|District of Columbia||5.66||5.62|
|Legend / Footnotes:|
|All dollar estimates are in current dollars (not adjusted for inflation).|
|Last updated: March 28, 2012 – new estimates for 2011; revised estimates for 2008-2010.|